The Valve Job Postings Page has a listing for an Engineer Electronics Engineer that seems a pretty concrete confirmation of hot rumors that Valve is planning to develop hardware of some sort (thanks Engadget). Here's the introduction with the pertinent information speaking of "whole new gaming experiences.":

For years, Valve has been all about writing software that provides great gameplay experiences. Now we’re developing hardware to enhance those experiences, and you can be a key part of making that happen. Join our highly motivated team that’s doing hardware design, prototyping, testing, and production across a wide range of platforms. We’re not talking about me-too mice and gamepads here – help us invent whole new gaming experiences.

I don't think that the Steambox will really resemble a PC (not even a stripped down one) or a console. My money is more on a set-top box for streaming games and other content to users at home.

Entering the high end console market at this point would seem unwise. Let MS and Sony duke it out. Why take an unnecessary risk by trying desperately to break into a market that requires a multi-billion $ initial investment just for an entrance fee? Not gonna happen.And the classic PC market? Nah. Plain unattractive. They'd have to deal with fierce competition, price wars, supply & demand issues, RMAs and all that crap... nope, not gonna happen either.

Which leaves us with choice no. 3, i.e. an OnLive kind of service. Streaming services are destined to become a major part of the media landscape a few years down the road and since all of the other big corps seem to have decided on a wait&see strategy this could just be the perfect opportunity for Valve to claim a major stake in this rather new area of business. Valve have proven to be smart long term strategists. They wouldn't do just another console or just another PC. They'll do something else, something newish. Steambox = Streambox. Mark my words.